U.S. Immigration Is NOT Rising, Despite What Commentators Say!

I was on Fox Business News the other day explaining that the upcoming crash will result from government’s suppressing the greatest credit bubble in history.

Many don’t want to believe that Athens will be the thing to send markets tumbling. But we’ve also got China going to extreme measures to prop up its stock market and economy, horrific demographics in Germany and Japan, and of course our own issues here at home – including a steeper decline in demographic spending by 2016 and the fracking bubble bursting.

Yet still so many spout news of a strengthening U.S. economy.

Housing’s on the rise!

So is immigration!

What!?

I’m not sure what they’re smoking, but neither our housing market nor immigration are improving, and certainly not over pre-2008 trends.

This is the problem I have over and over with economists and the media – they’re extrapolating short-term trends. OF COURSE things look good at the top of an economic recovery! But it’s lunacy to assume those trends will continue just because they look good now.

Mark my words – U.S. immigration is getting worse over time, and it will not save us from the next global crisis.

Few people are fully aware of just how much immigration has driven population growth in the U.S. – and hence, our economy.

From the late 1800s into World War I, there was a massive wave of immigration that fed our population. It peaked at 1.25 million per year between 1907 and 1914.

Then in 1991, we hit another peak of 2.25 million when we offered the amnesty program.

Mind you, that was against a population of 250 million versus 99 million in 1914. That’s a difference of 1.6% per year in 1914 and 0.5% in the early 1990s.

That’s a huge drop! And the larger point here is – our country will never see the wave of immigration we saw a hundred a years ago or even in the last few decades!

I’ve been forecasting for years that we’d see a major decline in both immigration and birth rates – the two things an economy needs most!

And despite unprecedented stimulus from QE, both of these things are occurring.

Immigration – both legal and illegal – has dropped from that peak of 2.25 million 24 years ago to just over one million in 2014. Births have dropped from a peak near 4.35 million in 2007 to 3.9 million last year.

And like so many economists, the Census Bureau is extrapolating the short term to think births will continue upward in a straight line.

It forecasts that we’ll have 420 million people by 2060. But in The Demographic Cliff, I make more realistic assumptions about birth and immigration that are still pretty reasonable: I get only 360 million.

That’s 60 million fewer people that won’t need homes, offices, groceries, gadgets – everything!

Sure, immigration – for the most part – has been pretty good the past several years. That’s largely thanks to Mexico, and to a lesser degree Latin America.

But the chart below shows that since 2000, immigration has been falling much more dramatically:

Immigration to the US is down since 2000

Over the long term, Mexican immigration doesn’t look so great now, does it?

It’s down from 400,000… to just around 120,000.

Let’s take an even closer look: Between 1995 and 2000, 2.95 million Mexicans crossed the border.

Then, from 2005 to 2010, it balanced out to zero as a reaction to the great recession. As many Mexicans came in as left! Holy cow!

Meanwhile, immigration from Asia has been rising. But not by much.

The chart shows that, between 2000 and recently, immigration from India has climbed to 120,000 from 80,000. From China it’s up to 140,000 from the same levels.

That nowhere near offsets the drop in immigration from Mexico!

There is some good news in all this. We’ll likely get more immigration from China in the next few years as that country falls as I’ve been saying it would (I discuss this in detail in the upcoming issue of The Leading Edge) – yet, those are the more wealthy and affluent. That adds productivity and spending to our economy.

But overall, immigration is falling. And if it looks bad now, just wait until we have a major financial crash and an outright depression!

We should take a lesson from Australia. The Land Down Under has one of the best immigration policies in the world.

That country encourages immigration. However, it’s very selective in the skills it targets. It doesn’t let it happen by accident. As a result, it has a larger echo boom generation than its baby boom. That’s why it has the best demographic trends in the world as far as wealthy countries go.

But over here, I expect our millennials (or echo boomers) to reject higher immigration rates as we sort through our issues with inequality.

After all, we saw the same thing during the more America-centric Bob Hope generation. That happened between the immigration booms from the Henry Ford generation and the baby boom. Like all things, it’s a cycle!

But ultimately, cutting down on immigration will be a huge mistake for us. This country relies on immigration – always has. And it’s clearly worked to our advantage both in innovation and population growth.

So before you heed the “wisdom” of so many news types espousing how immigration and housing and America’s economy is on the rise, take a step back and look at the bigger picture.

Harry Dent

Harry

Follow me on Twitter @harrydentjr

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Categories: Forecasts

About Author

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.